What is the deal with the Apple Upgrade program?

The new Apple Upgrade program has arrived, allowing you to rent a variety of iPhones, iPads, Macs, and Watches for a low monthly fee. The company promises that you will not pay the full cost of the device during the lease period of one to three years, and in some cases, you will pay hundreds of dollars.

The app’s basic features make it sound like a great deal… so there has to be something to it, right?

The answer depends on how you use the Extension Program. At least with current prices, a diligent user should be able to pay monthly, trade in their phone after a year or so, and walk away. But like any program related to monthly payments and sales, there is a caveat to be aware of – the most important thing is to be able to pay for the entire duration of the contract.

The terms of the program work as follows: You will pay the same amount every month for the duration of your contract. At the end of your lease, you have three choices. One of the options is to buy the device by paying the difference between what you paid and its residual value. For example, if you pay $695.76 to lease an iPhone Air for two years, you would have to pay $303.24 to buy it at its original price of $999.

Here’s a breakdown of how much you’ll pay for devices included in the Apple Upgrade program, and how much you’ll pay to buy those devices at the end of your lease:

So there are two other things you can do. At the end of your lease, you can also choose to just end the contract there, although you will return the device and lose any sale or trade value. Or you can upgrade to another device at the same time and switch to the monthly payment that the new device requires.

What makes the Upgrade program a loan, and like any loan, there is a contract, and a fee that you must follow.

Apple says there are no late fees or interest on the loan, which is offered by buy now, pay later Klarna. In words to SeasideKlarna spokeswoman Clare Nordstrom says that if someone misses three payments in a row, the company will “terminate the rental agreement and the customer will have to pay the remaining amount.”

Klarna does not say what will happen if you do not pay the balance. However, help page about salary and Klarna says that if the payment “is not registered by the last anniversary date, the debt is transferred to debt collection,” although it is not clear whether this is related to the Apple Upgrade program. Seaside reached out to Klarna for more information but did not hear back immediately.

And time 9 to 5mc numbers that indicate that Apple can install your phone in “Restricted Mode” due to lack of paymentApple spokesman Brian Bumbery confirmed that “there will be no restrictions placed on the use of the device due to the omission or default of the Apple Upgrade program.”

Apple Upgrade fees can also stack on top of other bills and subscriptions you may have. The possibility of having a loan is a big problem with BNPL services like Klarna, almost half of the users who pay late one loan in 2025, according to LendingTree. Klarna also uses customer data selling customized products.

During the rental period, Klarna has your device. You are responsible for any damages, and you will be charged if you do not return the device “in good condition.” That’s why Apple is encouraging customers to sign up for an AppleCare subscription that can significantly increase the cost of your phone. AppleCare costs $9.99/month and up to protect iPhones, while iPad protection starts at $5.49/month; Mac coverage starts at $3.99/month; and protection for Watch Series 11 and up for $4.99/month. You can also pay $19.99/month to protect three devices.

Apple also says that you have to pay an early termination fee if you want to return the device before it expires or if you want to have it repaired early. Additionally, Apple says you’ll have six months to decide whether you want to upgrade and return your current device after leasing it, opt out of the program, or buy your device outright. You will still be billed monthly during this time, making the program worthless if you do not choose the same option.

But even if you only have a small monthly fee to lease the device, you can lose some money if you choose to repair your device instead of buying it.

Let’s say you lease an iPhone 17 and pay $551.76 over the course of a two-year lease. If you choose to upgrade to the next iPhone instead of paying the extra $247.24 to buy the iPhone 17 at its original price of $799, you’ll miss out on the money you could have made selling the device or trading it in.

Data from the tree comparison page SellUp suggests that iPhones lose about 35 to 40 percent of their value two years after launch. If we put those thoughts on the iPhone 17, it means that you can resell a two-year-old device for about $520 if it loses 35 percent of its value. In other words, you would have only spent $279 to use the phone for two years. You can get a small refund by trading in the device through Apple or the Back Market, but either way, if you upgrade the rental device right away, you won’t be able to get your money back.

With all of this in mind, the Apple Upgrade program may not be the best way to get the company’s latest products, especially if you want or need flexibility from your device. But with prices for new phones, tablets, and laptops rising, it’s an alternative for people who can’t afford a new device or would prefer a lower monthly payment than what’s offered through Apple, as long as they’re aware of the risks.